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Alex Baldock became the CEO of Dixons Carphone plc (LON:DC.) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Dixons Carphone plc's CEO Compensation With the industry
At the time of writing, our data shows that Dixons Carphone plc has a market capitalization of UK£1.3b, and reported total annual CEO compensation of UK£1.0m for the year to May 2020. That's a notable decrease of 36% on last year. Notably, the salary which is UK£850.0k, represents most of the total compensation being paid.
On comparing similar companies from the same industry with market caps ranging from UK£742m to UK£2.4b, we found that the median CEO total compensation was UK£1.6m. Accordingly, Dixons Carphone pays its CEO under the industry median. Moreover, Alex Baldock also holds UK£432k worth of Dixons Carphone stock directly under their own name.
Talking in terms of the industry, salary represented approximately 72% of total compensation out of all the companies we analyzed, while other remuneration made up 28% of the pie. Dixons Carphone is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Dixons Carphone plc's Growth Numbers
Dixons Carphone plc has reduced its earnings per share by 82% a year over the last three years. In the last year, its revenue is down 2.5%.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Dixons Carphone plc Been A Good Investment?
Given the total shareholder loss of 21% over three years, many shareholders in Dixons Carphone plc are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Alex is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. It's tough to say that Alex is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Dixons Carphone that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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